E-checks Requiring Two Signatures

Many, if not most, accounts requiring two signatures are business accounts. Checks on these accounts are not eligible for ARC or POP conversion, and you should be able to identify and return those entries. This is important, because you don't get NACHA rule coverage for business accounts that would permit a return after your midnight deadline (as you do for unauthorized ACH entries to consumer accounts).

For those few consumer accounts on which you have agreed to check to make sure there is more than one signature, there is really nothing extra for you to be concerned about. A check with only one signature when two are required is the legal equivalent of a check without any authorized signature. You are really no more exposed than you would be if you were dealing with a single-signature account and the check is unsigned or forged. Your protection is your customer's hoped-for review of the monthly statement, and prompt notification if an item is inappropriately paid.

In fact, when your consumer customer's check is converted to an ARC or POP ACH entry, your bank gets more time to return the item if it's unauthorized. When the paper check is presented for payment, you only have until your midnight deadline to determine whether the check is properly payable and return it if it's missing a required signature. NACHA rules give you an extra time period to allow for customer review of an account statement.

First published on BankersOnline.com 5/29/06